Information about Deeds and Mortgages
by: Micronesian Legal Services Corporation
Here are some commonly asked questions about deeds.
1. What is a deed?
A deed is a document that transfers ownership of real property. It contains the names of the old and new owners and a legal description of the property including the parcel or tract number. A deed should be signed before a notary public by all parties.
2. Do I need a deed to transfer property?
Almost always. You cannot transfer real property without having something in writing. In some very rare situations, a document other than a deed is used. For example, a court order in a divorce or a debt collection case might order real property transferred or sold.
3. I understand there are different kinds of deeds. Does it matter which kind of deed I use?
Yes, it can make a great deal of difference. You should always closely examine any deed that you are asked to sign. Here is a brief description of the most common types of deeds:
A quitclaim deed transfers whatever ownership interest the person doing the conveying has in the land being given, if any. It makes no guarantee about the extent of his or her ownership interest in the property.
A grant deed transfers your ownership and implies certain promises---that the title has not already been transferred to someone else or been mortgaged, except as set out in the deed.
A warranty deed transfers the giver's ownership and clearly promises the receiver that the giver has good title to the property. If you are being given property, you are best off with a warranty deed. A warranty deed also usually promises that the land is free and clear of all "liens and encumbrances except those of record". Generally, this means that the title is clear.
A deed of gift or gift deed is used when one person is making a gift of land to another person. This type of deed is similar to a grant deed as described above.
4. Does a deed need to be signed in front of a notary public?
No, but it is a very good idea to do so. The persons who will be signing the deed (the person who is transferring the land and the persons who is receiving title to the land) should take the deed to a notary public, who will witness all of the signatures, sign the deed, and stamp it. Each person signing the deed must be personally known to the notary or else have some form of identification with a photograph, such as a driver's license or a passport to show the notary. The notarization means that the notary has confirmed that the signatures on the deed are genuine.
5. Are there any other documents that must go with a deed?
No
6. After a deed is signed and notarized, do I have to file it anywhere?
Yes. The law in the FSM as of 2006 is that you must record (file) the deed and any other relevant documents at the Court of Land Tenure. You should have the original and at least 2 copies of the deed and any other relevant documents. The Court of Land Tenure office will file, stamp, and keep the original. They will return to you 2 copies. It is very important that you keep your filed copies of the documents in a safe place so that you can later prove, if necessary, that you filed the documents.
The importance of filing the deed is that, by FSM State law, it gives notice to all other people that you own the land being transferred. If you do not file the deed, you run the risk of having another deed being given to someone else for the same land. If the second deed is filed before your deed, you may not have good title to the land even though your deed was signed first.
7. Does it cost anything to record a deed?
Yes. The Court of Land Tenure charges a minimal fee to record a deed.
8. Is a mortgage the same thing as a deed?
Not exactly. A mortgage is usually required by someone, such as a bank, who lends you money. A mortgage is a document signed by the persons borrowing the money which admits the amount of the loan and that it must be repaid on time. If the loan is not repaid on time, the lender can use the mortgage to sell the land described in the mortgage and use the money to repay the loan. If the land is sold by the lender, the borrower will be required to leave the land and title to the land will pass the new buyer. Just like a deed, the lender will record the mortgage so that all other persons know that the land cannot be transferred to someone else without the lender being paid.
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